DHS awards IBM $179M for Computer Systems Design Services, spanning over two years

Contract Overview

Contract Amount: $179,143,432 ($179.1M)

Contractor: International Business Machines Corporation

Awarding Agency: Department of Homeland Security

Start Date: 2023-09-08

End Date: 2026-06-07

Contract Duration: 1,003 days

Daily Burn Rate: $178.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: CDS BRIDGE CONTRACT POP 09/08/2023 - 09/07/2025

Place of Performance

Location: BETHESDA, MONTGOMERY County, MARYLAND, 20817

State: Maryland Government Spending

Plain-Language Summary

Department of Homeland Security obligated $179.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION for work described as: CDS BRIDGE CONTRACT POP 09/08/2023 - 09/07/2025 Key points: 1. Contract value of $179.14 million for a 2-year period suggests a significant investment in IT infrastructure. 2. The firm fixed-price contract type indicates that costs are largely predetermined, offering budget predictability. 3. Awarded under full and open competition, this contract likely benefited from a competitive bidding process. 4. The services fall under Computer Systems Design, a broad category essential for modern government operations. 5. IBM's selection for this substantial contract points to its established position in the federal IT services market. 6. The duration of the contract (1003 days) allows for sustained support and development of critical systems.

Value Assessment

Rating: good

The contract value of $179.14 million over approximately 33 months (September 2023 to June 2026) averages to about $5.4 million per month. Benchmarking this against similar large-scale IT system design contracts within federal agencies is challenging without more specific service details. However, the firm fixed-price nature suggests that the government has negotiated a set price, which can be advantageous if the scope is well-defined. The total award amount appears substantial, reflecting the complexity and scale of the services required by FEMA.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that all responsible sources were permitted to submit bids. The specific number of bidders is not provided, but this procurement method generally fosters a competitive environment, which can lead to better pricing and service offerings for the government. The open competition suggests that multiple companies vied for this opportunity, and IBM was selected as the most advantageous offer.

Taxpayer Impact: Full and open competition is the most taxpayer-friendly approach as it maximizes the pool of potential offerors, driving down prices through market forces and ensuring the government receives the best value for its investment.

Public Impact

The Department of Homeland Security, specifically FEMA, will benefit from enhanced computer systems design services. This contract supports critical IT infrastructure necessary for disaster response and management operations. The services delivered are expected to improve the efficiency and effectiveness of FEMA's technological capabilities. The primary beneficiaries are government agencies relying on robust IT systems for their missions, ultimately serving the public through improved service delivery.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if the system design is highly proprietary.
Risk of scope creep if requirements are not meticulously managed throughout the contract lifecycle.
Dependence on a single large contractor for critical IT infrastructure design.

Positive Signals

IBM's extensive experience in large-scale IT projects provides a strong foundation for successful delivery.
The firm fixed-price contract structure incentivizes efficient project management and cost control.
Awarded through full and open competition, suggesting a competitive selection process that likely secured favorable terms.

Sector Analysis

The federal IT services market is vast and highly competitive, with agencies increasingly relying on contractors for specialized expertise in areas like computer systems design. This contract falls within the broader IT services sector, which encompasses a wide range of activities from software development to cloud computing and cybersecurity. Spending in this sector is consistently high as agencies modernize legacy systems and adopt new technologies to meet evolving mission requirements. IBM is a major player in this market, competing with numerous other large and small businesses for significant government contracts.

Small Business Impact

The data indicates this contract was not set aside for small businesses (ss: false, sb: false). As a large contract awarded to a major corporation, it is unlikely to have significant direct subcontracting opportunities for small businesses unless specifically mandated or pursued by the prime contractor. The focus is on a large-scale IT service provider, rather than fostering direct small business participation through set-asides.

Oversight & Accountability

Oversight for this contract would typically be managed by the Federal Emergency Management Agency (FEMA) contracting officers and program managers. The firm fixed-price nature provides some inherent cost control. Transparency is generally maintained through contract award databases like FPDS. Specific oversight mechanisms would include regular progress reports, performance reviews, and adherence to the Statement of Work. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.

Related Government Programs

IT Systems Modernization
Cloud Computing Services
Software Development Services
IT Consulting Services
Disaster Management Technology

Risk Flags

Potential for vendor lock-in
Risk of scope creep in IT projects
Dependence on a single large contractor

Frequently Asked Questions

What is this federal contract paying for?

Department of Homeland Security awarded $179.1 million to INTERNATIONAL BUSINESS MACHINES CORPORATION. CDS BRIDGE CONTRACT POP 09/08/2023 - 09/07/2025

Who is the contractor on this award?

The obligated recipient is INTERNATIONAL BUSINESS MACHINES CORPORATION.

Which agency awarded this contract?

Awarding agency: Department of Homeland Security (Federal Emergency Management Agency).

What is the total obligated amount?

The obligated amount is $179.1 million.

What is the period of performance?

Start: 2023-09-08. End: 2026-06-07.

What is IBM's track record with similar large-scale IT system design contracts for federal agencies?

IBM has a long and extensive history of performing large-scale IT system design and implementation contracts for various federal agencies, including the Department of Defense, NASA, and other civilian departments. Their track record includes major projects in areas such as enterprise resource planning (ERP) systems, data center modernization, cloud migrations, and custom software development. While specific performance metrics for past contracts are not detailed here, IBM's continued success in winning significant federal IT awards suggests a generally positive performance history. However, like any large contractor, they have also faced scrutiny and challenges on specific projects. A deeper dive into past performance evaluations and contract close-out reports for comparable FEMA or DHS contracts would provide more granular insights into their specific strengths and weaknesses in delivering similar services.

How does the $179 million contract value compare to typical spending on computer systems design services by FEMA?

The $179.14 million award for computer systems design services over approximately two years represents a substantial investment for FEMA. To benchmark this effectively, one would need to analyze FEMA's historical spending patterns for IT services, specifically for system design and development. Agencies often have significant annual IT budgets, and large, multi-year contracts like this are common for critical infrastructure projects. Without access to FEMA's specific IT budget allocations and past contract awards for similar services, it's difficult to definitively state if this is high or low relative to their typical spending. However, given the duration and the nature of system design, the amount suggests a complex and critical undertaking for the agency, likely aligning with major modernization or enhancement initiatives.

What are the primary risks associated with a firm fixed-price contract of this magnitude for IT system design?

The primary risks associated with a firm fixed-price (FFP) contract of this magnitude for IT system design revolve around scope definition and management. If the requirements are not clearly and comprehensively defined upfront, there is a significant risk of scope creep, where the project expands beyond its initial parameters without a corresponding increase in contract value. This can lead to the contractor incurring unexpected costs or the government not receiving the full scope of desired functionality within the fixed price. Another risk is that the contractor might cut corners on quality or innovation to maintain profitability under the fixed price, especially if unforeseen technical challenges arise. Conversely, if the government has underestimated the complexity, the FFP could lead to a less-than-optimal solution if the contractor is unwilling to invest further without additional funding.

How does the 'Computer Systems Design Services' NAICS code (541512) encompass the work likely being performed under this contract?

The North American Industry Classification System (NAICS) code 541512, 'Computer Systems Design Services,' is a broad category that encompasses a wide range of activities related to designing and developing integrated computer systems. This typically includes analyzing user needs, designing system architecture, developing software, integrating hardware and software, and providing consulting services related to these activities. For FEMA, this could involve designing new systems for data management, improving existing disaster response platforms, integrating various software applications, or developing custom solutions to meet specific operational requirements. The code is appropriate for services that involve the planning, design, and implementation of complex IT solutions, rather than just the sale of hardware or off-the-shelf software.

What are the implications of awarding a large IT contract to a single vendor like IBM for FEMA's systems?

Awarding a large IT contract for system design to a single vendor like IBM can have several implications for FEMA. On the positive side, it can lead to greater consistency, streamlined communication, and potentially deeper integration of services as the vendor develops a comprehensive understanding of FEMA's needs and existing infrastructure. It can also foster a strong partnership focused on long-term system evolution. However, the primary implication is increased vendor dependency, which can create a risk of vendor lock-in, making it difficult and costly to switch providers in the future. It also concentrates risk; if IBM underperforms or faces significant internal issues, it could severely impact FEMA's critical IT operations. Furthermore, relying on a single vendor might limit exposure to innovative solutions or alternative approaches that could be brought by a more diverse set of providers.

What is the significance of the contract being a 'Delivery Order' (aw: DELIVERY ORDER) under a larger contract vehicle?

The designation 'Delivery Order' (aw: DELIVERY ORDER) indicates that this specific award is a task order issued under a pre-existing indefinite-delivery, indefinite-quantity (IDIQ) contract or a similar type of contract vehicle. This means that the foundational contract terms, conditions, and pricing structure were likely established previously, possibly through a broader competition. The delivery order then specifies the exact quantity, delivery schedule, and price for a particular set of goods or services. For FEMA, this approach allows for flexibility in acquiring IT services as needed over the life of the IDIQ contract. It streamlines the procurement process for individual requirements, as much of the vetting and negotiation has already occurred. The $179 million likely represents the total value allocated to this specific delivery order, which could be one of many under the parent contract.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Computer Systems Design and Related Services › Computer Systems Design Services

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 6710 ROCKLEDGE DR, BETHESDA, MD, 20817

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $179,143,432

Exercised Options: $179,143,432

Current Obligation: $179,143,432

Actual Outlays: $125,072,500

Subaward Activity

Number of Subawards: 68

Total Subaward Amount: $14,101,250

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Parent Contract

Parent Award PIID: HHSN316201200030W

IDV Type: GWAC

Timeline